Tuesday, July 27, 2010

BP today announced that its group chief executive officer Tony Hayward would step down with effect from October 1, and would be replaced by American Robert Dudley, who is currently overseeing the company’s clean-up operations in the Gulf of Mexico.

Hayward, who has been BP’s CEO for three years, will take up a non-executive position with its Russian operations, TNK-BP, and will remain on the board of BP until November this year.

The “gaffe-prone” Chief Executive Officer will, however, will receive a year’s salary in lieu of notice, amounting to £1.045 million (about Rs 7.6 crore), and a further £10.8 million (over Rs 78 crore) in pension.

Hayward’s huge severance package comes at a time when BP recorded a historic loss. Today, BP also reported a £17-billion loss for the second quarter against a profit of £3.1 billion in the same quarter last year. BP is also setting aside another £20.7 billion for cleaning up the disastrous spill in the Gulf of Mexico, where the company has been fighting an oil spill since April 20.

$30 bn asset saleThe energy major plans to sell oil and gas assets worth $30 billion over the next 18 months in an effort to recover from the worst financial disaster in the company’s history.

Commenting on the decision to step down, Hayward said: “The Gulf of Mexico explosion was a terrible tragedy for which — as the man in charge of BP when it happened — I will always feel a deep responsibility, regardless of where blame is ultimately found to lie.”

Over 830 miles of Gulf Coast shoreline across Louisiana, Mississippi, Alabama and Florida have been affected due to one of modern history’s worst oil-spills. The clean-up operations have so far recovered nearly 825,000 barrels of oil-contaminated liquid. Further, a total of 409 controlled burns had been carried out, removing an estimated 261,400 barrels of oil from the surface of the sea. More than 40,000 people are involved across five states of the US. BP group companies have also been named as defendants in over 300 private civil suits following the disaster.

Robert Dudley, 54, who will be BP’s first non-British CEO in the company’s history, is a main board director of BP and currently runs the recently-established unit responsible for clean-up operations and compensation programmes in the Gulf of Mexico. He joined BP from Amoco after the merger of the two companies in 1998. He was president and CEO of BP’s Russian joint venture, TNK-BP, until 2008.

Dudley said, “I do not underestimate the nature of the task ahead, but the company is financially robust with an enviable portfolio of assets and professional teams that are among the best in the industry. I believe this combination — allied to clear, strategic direction — will put BP on the road to recovery.”

On his appointment, Dudley will be based in London and will hand over his present duties in the US to Lamar McKay, chairman and president of BP America.

Meanwhile, protesters from global environmental group Greenpeace went on a mission to close several dozen BP service stations across London, where the oil company is headquartered. Defending its move against BP, Greenpeace said: “We want to send a strong message to BP’s new boss to ditch the spin and actually move ‘beyond petroleum’. Today we’re asking you (politicians) to take a first step, and help push for the strongest possible European law on fuel quality,” Greenpeace said in its statement.

Many British companies have had a long presence in India, but other countries are overtaking levels of trade between the two

Despite the long history, UK-India trade ties at present are not at their best. From being the fifth largest source of import for India just five years ago, UK has slipped to the 18th position now. Experts also claim that UK’s foreign direct investment (FDI) into India has fallen steadily over the last five years.

According to some estimates UK-India trade is around £11.5 billion. UK is also the top European investor in India while India is the top Asian investor in the UK, according to the UK India Business Council (UKIBC). Indo-UK trade has been growing at a compound annual growth rate (CAGR) of 14 per cent since 2001.The trade in merchandise has been growing at a CAGR of 13 per cent while that in services has registered 15 per cent growth.

The scheduled visit of UK’s new Prime Minister David Cameron is likely to address the economic ties between the two countries, giving them the highest priority.

In 2008 (the latest year for which numbers are available), the UK was the fourth largest investor in India after Mauritius, Singapore and USA, with £ 3.87 billion of FDI stock, according to ONS in the UK. The sectors that attracted most investment from UK into India are energy, telecom, IT, financial services and retail.

Starting from the days of the East India Company, several large British companies have thrived — as they continue to thrive — in India. Some of the better-known include FMCG major Hindustan Unilever, BP (earlier known as British Petroleum), HSBC, Cadbury, GlaxoSmithKline Pharmaceuticals, Standard Chartered Bank, British Airways, Virgin Atlantic, Rolls Royce, Reuters, JCB and Vodafone.

Some of them have been in India for several decades now: Standard Chartered Bank and HSBC began their Indian operations in the mid-nineteenth century; Hindustan Unilever started out in India in the 1930s; while others like Tesco and Marks & Spencer have made their India forays only in the last five to 10 years. Car maker Jaguar Land Rover made its entry into India only in the last year or so, after India’s Tata Motors bought the company in 2008. For JLR, India for now is only a market for the sale of its products, and the company does not have a manufacturing base in India.

British companies feel that the sectors they are strongest in — such as retail and financial services — remain under tight government control. This in part explains M&S and Tesco’s presence in India as cash and carry ventures that address only the wholesale market.

One of the most successful British companies in India is Hindustan Unilever Ltd (HUL). HUL today is India’s largest fast moving consumer goods company, with leadership in home and personal care products and foods and beverages. The company says its brands touch the lives of two out of three Indians. With sales revenues of Rs 20,239 crore for the 15-month period January 1, 2008 to March 31, 2009, HUL employs over 15,000 people in India. Its British parent Unilever holds about 52 per cent of the equity.

Standard Chartered Bank is another British success story in India. Since opening its first branch at Kolkata in 1858, Stan Chart has played a significant role in the Indian banking sector and recently completed 150 years of existence.

Standard Chartered Bank India is the country’s largest international bank, with 90 branches across the country and now has approval from banking regulator Reserve Bank of India to open four more. It has over 8,000 employees and was the second largest contributor to the UK-based group’s profits in 2008. Vodafone Essar is the Indian subsidiary of Britain’s Vodafone Group and commenced operations in 1994, when its predecessor Hutchison Telecom acquired the cellular telephone licence for Mumbai. The company now has operations across the country with over 100 million customers, which accounts for nearly a third of its total customers worldwide. Vodafone is the world’s leading international mobile communications group, with about 333 million proportionate customers as on 31 December 2009.

GlaxoSmithKline Pharmaceuticals Ltd is one of the oldest pharmaceuticals company and employs over 3,500 people. Globally, the company is a $45 billion research-based healthcare and pharmaceutical company. In India, the company is a market leaders with a turnover of Rs 1,880 crore and a market share of 5.7 per cent.

Earthmoving and construction equipment major JCB India Limited started operations in 1979 as a joint venture company. In 2003, parent company (JCB UK) acquired the entire shareholding and today JCB is the fastest growing company in the Indian earthmoving and construction equipment industry. JCB has a park of over 80,000 machines and out of every two pieces of construction equipment sold in India, one is a JCB product.

Apart from Standard Chartered, banking company HSBC also has long historical ties with India. The antecedents of the HSBC Group in India can be traced back to 1853, when the Mercantile Bank of India, London and China set up its base in Mumbai with an authorised capital of Rs 5 million. Today HSBC India has over 2.2 million individual resident Indians as well as Non-resident Indian customers across India, USA, UK, Middle East and South East Asia.

British Airways was one of the earliest global carriers to enter India. Today BA offers a choice of 45 flights every week from five key cities — Delhi, Mumbai, Bangalore, Chennai and Hyderabad — to London Heathrow and other destinations worldwide.

Probably the most popular British company in India would be confectionery company Cadbury, which was recently acquired by US rival Kraft. In India, Cadbury began its operations in 1948 by importing chocolates. Over 60 years later, it has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (near Gwalior), Bangalore and Baddi (Himachal Pradesh) and four sales offices (New Delhi, Mumbai, Kolkota and Chennai).

Cadbury in India enjoys a value market share of over 70 per cent — the highest Cadbury brand share in the world!

Source: UKIBC, UKTI, British High Commission (Chennai) and company websites

David Cameron’s decision to make India one of his first diplomatic engagements outside the United Kingdom and meet Prime minister Manmohan Singh this week indicates his seriousness of purpose

When UK’s new Prime Minister David Cameron and nearly half his senior cabinet colleagues set foot in New Delhi, it is expected to mark the beginning of a new chapter in Indo-British bilateral relations.

It will be the beginning of Cameron’s quest for an “enhanced partnership” with India. As soon as he assumed office in the first week of May, Cameron made it clear that India would be one of the key focus areas of the new government.

In the Queens’s address to the two Houses of Parliament on May 25, India was the only country that was mentioned in terms of Britain’s bilateral relations. The Queen’s Speech (delivered to the first session of Parliament each year), written by the government, read, “My government looks forward to an enhanced partnership with India.”

This was later elaborated by No. 10 Downing Street: “The Government is committed to an enhanced partnership with India as an emerging global power, one that reflects our deep and historic ties and recognises India’s strategic importance.”

When Cameron and his team engage in bilateral talks with Prime Minister Manmohan Singh and his colleagues in New Delhi, some of the key issues expected to come up are economic and trade relations between the two countries, Britain’s and India’s role in the global economic framework that has taken the form of the G-20 in the last few years, and their role in Afghanistan where Britain has committed troops while India’s role has been non-combative. Another key issue that could be discussed is Britain’s new cap on immigration, which would restrict the number of non-EU workers coming into the country. Cameron and Singh will have a handful of issues to discuss, with little time for a ceremonial guided tour of the Taj Mahal.

Many in the newly elected Tory-Lib Dem coalition government have been very critical of how the previous Labour government had handled UK’s relationship with India during its 13-year reign. While diplomatic relations between India and Britain had been cordial for the most part, economic indicators at the ground level point in the other direction. In the last 10 years, Britain has slipped from being India’s fourth biggest source of imports to the 18th position. Foreign direct investment from Britain into India has fallen steadily in the last five years, even though India Inc was aggressively active in Britain during this period.

The Tata Group made ambitious and impressive M&A forays in the UK, the highlights of this seemingly one-sided love affair being the acquisition of steel maker Corus and later Jaguar Land Rover. According to the latest report for 2009-10 released by UK Trade & Investment, India is the fourth largest investor in the UK, ahead of Germany and China but behind only US, Japan and France.

If there is one point on which members on both sides of the House agree, it is this: Britain needs to start treating India as an economic powerhouse of tomorrow and that Britain has more to gain from a vibrant economic relationship with India. Alok Sharma, Tory MP from Reading, says, “This relationship has changed. It is a relationship of equals [now]. Going forward, India and China could become first among equals.” Cameron’s decision to make India one of his first diplomatic engagements outside the UK suggests that his administration is ready to put its money where its mouth is.

While Britain is still one of the few western powers that is backing India’s bid for a permanent seat in the UN Security Council, a support reiterated by the current government, there is also a call for elevating India’s position from a G-20 member to a G-8 member. Some even argue that multiple global economic institutions should be done away with. Keith Vaz, Labour MP from Leicester East, believes that a multiplicity of such institutions is futile. “India today is so powerful that it need not count UK anymore,” says Vaz, whose family traces its roots to Goa. He adds, “UK cannot do business outside the EU without India.”

In that context two recent moves by the UK government can damage its aspirational relationship with India: First, the decision to put a cap on non-EU immigration, which will restrict the inflow of workers to 24,100 a year; and second, UK’s proposal to cut development aid to India.

UK has historically been one of the most desirable destinations for students and doctors from India. Vaz’s elder sister and newly elected MP from Walsall South, Valerie Vaz, argues that Britain must encourage more doctors from India to work in UK’s National Health Service. Further, Britain’s universities need Indian students as much as the students need access to top-quality education in UK. After all, Manmohan Singh himself is a product of Oxbridge.

Britain too has big expectations from India. Some of the sectors that Britain counts as its core sectors — such as financial services, retail and education — remain tightly controlled in India. “Market access in India in the areas that are key to Britain is still not very easy,” says Jo Johnson, Tory MP from Orpington and former New Delhi-based South Asia Bureau chief for the Financial Times.

MPs from the Labour camp argue that the Tory claim about a neglected Indo-British relationship under the Labour regime is inaccurate and a theory spun for its convenience. Keith Vaz says that the institutional framework can help the bilateral relationship only at a broad level. What really clinches the deal at the end of the day is the warm personal relationship between the two countries at the leadership level. On that account it is claimed that former Prime Minister Gordon Brown and Manmohan Singh shared a special chemistry, something 43-year old Cameron will have to start working on with his 77-year old Indian counterpart.

Labour MP Virendra Sharma believes that historically, it is Labour rather than the Tories that has been closer to the Congress Party. As a case in point, Keith Vaz recollects David Miliband staying at Rahul Gandhi’s house during one visit to India.

Whether this “enhanced partnership” will be achieved through bilateral institutions or personal chemistry between the leaders or, better still, a combination of these two, will have to be seen after Cameron returns home after meeting Manmohan Singh. Johnson says, “The world cannot change with a three-day trip. This (Cameron’s) visit to India has to be seen as a signal of intent.”

The best place to start, he says, is to set trade targets, investment targets and two-way FDI targets, and both countries must identify sectors where the seeds of this enhanced relationship can be planted.

Sunday, July 25, 2010

Anyone who says he counts R K Narayan among his favourite authors has to be a friend of India. So, when the UK’s new business secretary, Vince Cable, visits India later this week with Prime Minister David Cameron and other senior cabinet colleagues, there will be little need to break ice. Not just because Cable likes Narayan, but he has been in touch with India for nearly four decades now.

For starters, the parents of his late wife are from India. When his party Liberal Democrats sewed a difficult and hotly debated post-election alliance with the Conservatives in the first week of May to form a rare coalition government in Britain, Cable said: “My Indian in-laws always told me arranged marriages last longer than love matches.”

Narayan and arranged marriages apart, Cable will have yet another edge in winning over India. He talks about India’s “green revolution”. That ought to make him old and wise enough to understand an India that is seen beyond the early 1990s economic liberalisation. He, therefore, can be counted as among the few western politicians who understands India more than for its 1.2 billion-population market and know its true potential outside business and industry. He deftly seals the deal when he defends the UK’s recent proposal to cut development aid to India and says it is a recognition of India’s success story. Now, who can argue with that?

Cable succeeds Peter Mandelson, who was Labour’s favourite spin-doctor and was a high-profile cabinet member.

When in India later this week, Cable is expected to say one thing every small and big businesses in India wants to hear. “We are open for business.” Under the 13-year Labour regime, a lot was left to be desired for economic/trade relations between India and the UK. As a matter of fact, Indian businesses were a shade more ambitious in the UK than UK businesses in India. Cable says it’s a two-way street from now on and the focus of the new Tory-Lib Dem government will be to improve the flow of investments both ways.

Cable, 67, during his formative years as an economist, says he travelled across the length and breadth of India. His understanding of India is first hand and he has never fallen out of touch with India. A big admirer of India’s economic success, he says the new relationship with India will be rooted to the ground.

As a student, Cable read natural science and economics at Cambridge University followed by a PhD at Glasgow University. Between 1966 and 1968, he worked as Treasury Finance Officer for the Kenyan government and later spent two years as a first secretary in the diplomatic service in the Foreign and Commonwealth Office. After a few more stints in the government, he moved to the private sector with Shell International in 1990 and became the energy giant’s chief economist in 1995. He later became a research fellow at the Centre for the Study of Global Governance at the London School of Economics for three years until 2004.

A straight-talking Cable has one other rare quality among his British peers that is more common in India. This Lib Dem minister started his political career with Labour. He served as a Labour Councillor in Glasgow between 1971 and 1974, before joining the Social Democrat Party (which was merged with the Liberal Party in the 1980s). He was first elected to Parliament in 1997 and joined the Lib Dem shadow cabinet in 1999. He had been the Liberal Democrat Shadow Chancellor since November 2003 and is currently Deputy Leader of the Liberal Democrats.

He shot to global fame, with the release of his book The Storm: The World Economic Crisis and What it Means in 2009. As early as 2003, he is considered to have predicted the coming of the global financial crisis that the world has just about managed to recover from. After being in politics for nearly four decades and for the first time tasting real power, there is little reason to believe that his peers, both at home and outside, will ignore the words of caution from “Saint Vince”.

The 2010 general election in Britain saw a record eight Members of Parliament of Indian origin enter the House of Commons. S Kalyana Ramanathan talks to some of them on the eve of British Prime Minister David Cameron’s visit

The times are not “a’changing”. They have changed. These 8 MPs, four from each of the two largest parties in Britain ,represent the new face of Westminster. They may be nowhere close to the top table either in Westminster or in their own party, but they are achievers in their own right. They are Members of Parliament of Indian origin in a country that ruled India a little over six decades ago.

Virendra Sharma, 63,

Labour, Ealing, Southall

It has been a long and arduous political journey for Sharma, who was born in India and migrated to the UK. The first stirrings of political ambition go back to as early as the seventies, a few years after he arrived in the UK. But he entered the House of Commons as an MP only in 2007, when a sitting Labour MP passed away, giving him a chance to contest the by-election. Unlike the other Indian origin MPs, Sharma comes from a family that had strong political leanings. His father, Lekh Raj Sharma, was a household name on Punjab’s political scene.

Sharma started out in the UK as a bus conductor. He then worked for the metro rail as a booking clerk. But he then went to the London School of Economics for higher studies and held a series of government jobs before becoming the Councillor for Ealing and later Mayor. Does he have any regrets about getting the Parliament seat rather late in life? “Journeys are always different,” he smiles philosophically. “Some arrive early, some late.”

Keith Vaz, 53, Labour, Leicester East The first and longest serving MP of Indian origin (the family traces its roots to Goa, but Vaz was born in Aden, Yemen ) in Parliament, Vaz made it to Westminster way back in 1987

A lawyer by profession —many remember his protest against Salman Rushdie’s Satanic Verses in the late 80s—Vaz argues that the movement for change in Westminster is too slow, but “we’re getting there”. He represents a constituency that has the most number of people of Indian origin, which partly explains his outrage at the present government’s plans to cap the number of non-EU immigrants coming into the UK.

Priti Patel, 38, Conservative, WithamPatel may be the new kid on the block, but she believes this early start is an opportunity to further her political career. Her mother is from Vadodara (then Baroda), but she has no links to India now – in fact the last time she visited was in 2003.

“I am very traditional in the British sense...like allegiance to the Queen etc, ” she says. Her parents ran a post office when Patel was growing up. “I literally grew up in the shop, under the till.” This background explains her strong support for the small businesses, which along with industries and agriculture provide nearly 83 per cent of employment in her constituency, while the national average is around 60 per cent.

Sitting at the Portcullis House cafeteria sipping English breakfast tea, she tells me that her boss and Prime Minister David Cameron is an agent of change within the party— “I am an MP not because of my gender. (Even then) there are 40 women MPs from the Tory party. That is a very powerful message,” she says.

Alok Sharma, 42, Conservative, Reading Like his colleague in the Labour camp Keith Vaz, Sharma too visits India regularly. Born in Agra, Sharma moved to the UK when he was 5. A chartered accountant by training, he says his interest in politics was nurtured when he was barely 10 or 11, delivering leaflets for the Tory party. His father too was politically active. Between 1999 and 2003 he worked in Germany in the banking sector. Returning to the UK, he got back into active politics, partly on the urging of his Swedish wife.

The journey from voter to member of Parliament took less than seven years. That, he says, is because of the democratic way his party selects nominees to contest elections. “The Conservative party is completely colour blind,” he says.

Paul Uppal, 43, Conservative, Wolverhampton South West Multicultural Uppal traces his ethnicity to India, but his grandparents lived in Kenya and his parents moved from there to the UK. “My culture is very important to me. But I consider myself both Indian and British.”

At home its one big family under one roof. He takes pride in saying that he lives with his parents. His 13-year old son, he says, is obsessed with India, and is trying to learn to speak in Punjabi and Hindi to communicate better with his grandparents.

Like his party colleague Alok Sharma, Uppal’s seven-year journey has taken him from being a “politically inclined voter” to someone who now sits in Westminster representing the interests of thousands of voters in his constituency.

“Some take 20 years, some less. Its just luck,” he says dismissing his recent success in the election to being in the right place at the right time. Sure, he wants to play a bigger role in his party. “I am the new boy. You have to be patient about it. What do you say in India? Sabar karo?

Valerie Vaz, 55, Labour, Walsall South Valerie Vaz, despite being Leicester East MP Keith Vaz’s elder sister, had to wait for her chance to enter Westminster until the 2010 elections. This is not to say she was politically dormant until then. Between 1986 and 1990 she was a Councillor in the London Borough of Ealing and was Deputy Leader in 1988-1989. She stood as a Parliamentary Candidate from Twickenham in 1987 and in the European elections in 1999 from the East Midlands.

A lawyer by profession, she says her quest for equality and justice drew her into politics. She believes the gender bias in Westminster is changing now. “The first real push for women MPs came in 1997.” Now there are five Asian women MPs in Westminster.

Her constituency Walsall South, is an Asian microcosm with ethnic minorities from India, Pakistan and Bangladesh making up nearly a fourth of the total population. The current population consists of third and fourth generation Asians.

Her last visit to India was some three years ago. But now, having asserted her position politically, she is hoping to network better with her counterparts in India and Pakistan.

Shailesh Vara, 49, Conservative, North West Cambridgeshire Ugandan-born Vara too is a lawyer by profession. His parents moved to the UK when he was 4. The 2010 election victory gave him his second term in Westminster. Considered a prominent person within his party, he served as Shadow Deputy Leader of the House of Commons, from November 2006 , speaking for the Conservative Party on Parliamentary matters from the Commons Front Bench. This made him the first MP from an ethnic minority background from the Tory party to become a shadow minister. Following the 2010 General Election, he was appointed as a Government Whip.

At the Conservative Party Conference in 2000, he was awarded the rising star of the party award with his party colleague Lord Alexander of Weedon (the lawyer who defended author Jeffrey Archer in his libel case against the Daily Star in 1987) describing him as a “future Tory party leader.”

Marsha Singh, 55, Labour, Bradford West Born in Punjab , he has been a Member of Parliament since 1997, winning four consecutive elections and maintaining his majority with impressive consistency with the exception of 2005, when he won with a lower majority. In 2010, he regained most of the votes lost in 2005, making him one of the longest serving MPs of Indian origin in Westminster.

Among the MPs of Indian origin, only Labour member Keith Vaz from Leicester East has more Parliamentary experience than Singh. He was a member of select committee for Home Affairs between 1997 and 2005 and for International Development between 2005 and 2010.

Brits love Coke. Not just the beverage, but the company that makes it — Coca-Cola.

A recent study by www.HireScores.com – a website that helps people looking for jobs find the right job websites – revealed that Coca-Cola ranked as the most desirable company to work for among Britons. The study further showed that among the top 10 dream jobs British workers aspire to be part of, eight are US companies and only two are British.

The survey covered 1,326 respondents, a negligible sample considering the nearly 29 million population that go to work in the UK.

The top dream jobs for Britons, apart from Coca-Cola, would be in Microsoft, Google, Apple, Vogue, Facebook, Disney and Kraft Foods (the American company that recently bought the UK’s leading confectioner, Cadbury). UK’s Virgin Atlantic and British Airways ranked as the fifth and 10th most desirable place to work.

The study, however, reiterates Britain’s love for the US and anything American. While Britain has given a resounding thumbs up for American companies, Prime Minister David Cameron is touring the US in an attempt to further strengthen the country’s relationship with her once trans-Atlantic colony.

In a special column in the Wall Street Journal on Tuesday Cameron wrote, “As this is my first visit to America as prime minister, let me emphasise that I am unapologetically pro-America. I love this country and what it's done for the world.”

In the WSJ column he wrote, “I am hard-headed and realistic about US-UK relations. I understand that we are the junior partner — just as we were in the 1940s and, indeed, in the 1980s.”

According to UK Trade and Investment’s latest report, the US once again stood out as the biggest investor in the UK. In 2009-10, 484 new investments had been committed by American companies, providing employment to over 15,000 people. The second biggest investor, Japan, had invested in 107 new projects to create 2,293 new jobs in the UK in the same year. India is the fourth largest investor in the UK.

The study that put Coca-Cola as the most desirable place to work for, however, also reveals that it is not the company’s nationality, but other factors that made it so. “The research found that 76 per cent of those polled, said their ‘dream job’ would be at Coca-Cola, with 23 per cent admitting it is for the ‘freebies’ and 42 per cent saying the ‘salary’ is the main reason for Coca-Cola being their dream job,” said the press release from www.HighScores.com.

However, only 16 per cent of those polled believe that they will land in their dream job, while 38 per cent admitted it was just a fantasy and 21 per cent feel it is unachievable.

Tuesday, July 13, 2010

Tata Steel’s plans to sell Corus’ Teesside Cast Products plant in the northeast of England suffered a setback today. The consortium they were in talks with pulled out of the deal, saying “Corus has appeared unwilling to engage on a constructive basis”.

The consortium comprising private equity firms Rutland Partners, Hatch Corporate Finance and local developer Chris Musgrave said they had written to Corus to terminate discussions in relation to TCP. “The group had put together a business plan and secured investment and customer support to enable the acquisition of TCP and a return to quality steelmaking on Teesside,” the group said in a media statement.

It refused to elaborate on the reasons behind the failed talks and the turnaround plans if it had successfully concluded a deal with Corus.

A company spokesperson said: “Corus is continuing to make every effort to find a long-term solution for TCP. We remain open to any offers from third parties interested in providing such a solution. To date, Corus has followed up every single enquiry and engaged constructively with any bidder that presented an offer and provided a viable future for TCP.”

The statement by the group of interested buyers said it is willing to re-engage if the new management — the recent change of management in Corus’ European business — demonstrates its willingness to provide the required information and access in a timely and professional manner, allowing the group to progress on its due diligence.

Sources said the reason behind the failed talks was because the buyers’ group refused to sign a confidentiality agreement with Corus. The claims could not be confirmed with either Corus or the buyers’ group.

Corus is also in talks with a Thai steel maker, Sahaviriya Steel Industries (SSI). Tata Steel’s vice chairman B Muthuraman had earlier this month said talks with SSI were on and Corus was awaiting a response from the Bangkok-based company.

Corus’ TCP has been in trouble for a year-and-a-half, since a multi-national group of steel buyers had pulled out of a 10-year purchase contract midway, forcing the management to mothball the plant in February. This has also put nearly 1,700 jobs at TCP at risk.

UK’s new coalition Prime Minister and Tory party leader David Cameron is all set to ‘carpet bomb’ India in the last week of this month. In his first foreign state visit since he took office two months earlier, Cameron is expected to land in India with half his cabinet colleagues on July 26, two days ahead of his formal diplomatic mission, Business Standard has learnt.

Though the British Foreign Office or India’s Ministry of External Affairs are yet to officially announce his itinerary, sources in the UK government said Cameron himself would first land in Bangalore, while his cabinet colleagues will fly into other state capitals, including Mumbai, Chennai, Hyderabad, Kolkata and, possibly, Chandigarh as well. This unique format has never been tried before, said foreign relations’ experts here.

Some key members of the government who will be visiting India with Cameron include Chancellor of the Exchequer (finance minister) George Osborne, business secretary Vince Cable, foreign secretary William Hague and possibly the Governor of the Bank of England, Mervyn King.

As part of Britain’s financial austerity drive, the entire delegation is expected to fly economy class on regular commercial flights into India. The high-powered team is expected to start the India sojourn on July 26, reassembling in New Delhi on July 27 to brief Cameron on their individual visits to various state capitals, at a mini-Cabinet meet. Cameron’s scheduled official meeting with Prime Minister Manmohan Singh is on July 28, according to sources here.

Labour neglectPart of the hype is meant to undo what Tory party MPs believe was the ‘neglect of India’ by the Gordon Brown government. Part of it could also be due to persisting differences on Afghanistan and due to Britain’s decision to reduce aid spending as part of its budget spending cuts.

Cameron’s visit, though yet to be played up by the media here, has elevated the expectation of members of the government, both in the UK and in India. Soon after forming a government in May, Cameron and foreign secretary Hague had announced plans to forge a “new and strategic relationship” with India.

There is a general belief in the government and in a section of the Tory party that the earlier Labour government had not done sufficient work on improving bilateral relations with India during its 13-year reign that ended in May this year.

A group selected from the Cabinet Office, the Prime Minister’s Office, Foreign Office and office of the Chancellor of the Exchequer was formed weeks ahead of Cameron’s visit. It has been preparing the ground for the 43-year-old head of the British government’s first state visit since he took office.

Likely to be discussed at length during Cameron’s visit are the business and economic relationship, the G-20 future agenda and the future of Britain’s and India’s role in Afghanistan.

Ahead of the two heads of government meeting in Delhi, George Osborne and Mervyn King are expected to meet leaders of Indian business and Reserve Bank governor Duvvuri Subbarao in Mumbai.

A battalion of business leaders are expected to accompany Cameron. Businesses from the retail and financial services sectors are expected to be represented in large numbers within this group. Informally, Cameron has also asked Tory MP Jo Johnson to be his advisor on his India strategy. Johnson was first elected to the House of Commons this year. He was the South Asia bureau chief for Financial Times and based in New Delhi between 2005 and 2008. He is also the younger brother of London’s mayor, Boris Johnson.

Swraj Paul’s eldest son Ambar looks to resurrect his career with the acquisition of one of London’s trendiest restaurants.

He was a staunch vegetarian until higher education took him to the US. He returned to London in 1982 with an MBA from Carnegie Mellon and a partiality for red meat.

From June this year, Ambar Paul, the older son of British-Indian industrialist Swraj Paul, will be able to turn that taste for steak and lobster into a business opportunity courtesy his purchase of Christopher’s American Bar and Grill, one of London’s most trendy restaurants.

For Ambar, 52, the Christopher’s buy is more than a personal whim. Although he had handled a wide-ranging portfolio in his father’s tea-to-steel Caparo Group in his earlier capacity as deputy chairman, he says his heart is in the hospitality business. His cousins in India run five-star hotel chain, The Park. In the UK, Caparo has four hotels (comprising 150 rooms under four independent names ).

Christopher’s also represents a resurrection of sorts for him. Between the early eighties to mid-nineties he rose within the Caparo group to become CEO and deputy chairman. In 1995, at just 37 years, he was afflicted by a life-threatening illness as a result of which he had to allow younger brother Angad to take charge as CEO by the turn of the new millennium.

Christopher’s, though, is not a Caparo acquisition that has been given to the eldest scion to run. It’s been bought with his own money. “I loved the brand and want to acquire more top-end restaurants,” he says.

Ambar declined to disclose how much he paid, but given Christopher’s location in the heart of London’s most fashionable theatre district, it is reasonable to suppose it was no throwaway price.

Ambar says it took an unusually long time, nearly a year, to buy this Covent Garden property, not least because of

differences over the price. The previous owner, Andrew Hoffmann of the Roche pharmaceuticals family, was also particular that the new owner could take the brand to the next level and retain its 50-odd employees.

Christopher’s was founded in 1991, but the address dates back to the nineteenth century when it was a papier mache factory. Its current ornate facade was added in 1870, when it became London’s first licensed casino.

The restaurant gets its name from its founder Christopher Gilmour, son of the late Ian Gilmour, Conservative Party minister and former proprietor of The Spectator. Politics don’t play a part in this purchase, Harrow-educated Ambar insists, although he votes Tory as opposed to his father’s preference for Labour.

Meanwhile, he has big plans for his new acquisition. He believes that Christopher’s, even at the current £45 average spend per customer will return his investment in three years. He has no plans to change the menu, which offers such favourites as “Carpaccio of beef ‘Harry’s Bar’ style” (a raw meat appetizer) at £9 or “USDA rump steak 10 oz” at £22 (Ambar’s health, however, prevents him from indulging his taste for steak and seafood — these days he sticks to chicken).

But he is keen to bring down the age profile of his customers, who are mostly in their 40s. “Today’s millionaires are in their 20s and 30s in the UK,” he says. The only other change is sprucing up the tired decor, an exercise he plans to complete by the end of next year.

There is, however, one set of customers Ambar does not wish to disturb. Christopher’s counts the Who’s Who in celeb circles as its customers — from Prime Minister David Cameron to former Financial Times editor Richard Lambert, to Hollywood stars like Bruce Willis and Goldie Hawn. With regulars like that, who needs advertising.

Caparo is alive and well, chairman Lord Swraj Paul said in a statement today after questions were raised about the financial health of the UK-based engineering conglomerate.

The group issued a statement clarifying its financial health. It said the reports in the UK media questioning its financial health were based on 2008 calendar year results and its current state had improved significantly.

“Cash flow forecasts to the end of December 2010 indicated the group would be able to trade within its existing ‘and expected’ loan facilities, Caparo said, though it admitted there was little room for manoeuvre,” the Daily Mail had said in its report yesterday. Business Standard had reported this based on the Daily Mail report.

Angad Paul, Caparo’s chief executive, said: “Is it necessary to remind anyone that from August to December 2008, the financial sector suffered a ‘blood bath’, which then led to the most rapid downturn in manufacturing industry.”

“Indeed it is a credit to Caparo’s management that we exited that year with a relatively small loss. We should not forget that this was a time when the world’s banks failed and many much larger companies were perceived to be bankrupt.”

He said 2009 was an extremely difficult year, but now, more than half way into 2010, the group expected to produce revenues across its operations ahead of 2007.

“In India alone, we will achieve revenue of Rs 1,400 crore in 2010 rising to Rs 2,000 crore plus in 2011, slightly less than predicted, but I remain bullish that Rs 3,000 crore will be achieved in 2012. Throughout the last 18 months we have continued to enjoy the support of our stakeholders, and I am pleased to say that we have now returned to profitability. Let me assure all of our team, our customers and suppliers that we are on course and will continue to go from strength to strength,” he said.

Caparo’s financial statements for 2009 are not ready. The UK-based group consolidates its India operations where the accounts are prepared on a financial year basis (ending March).

Monday, July 5, 2010

Fresh doubts have been cast over the future of Lord Swraj Paul's UK-based engineering conglomerate, the Caparo Group, following a report by the group's auditors, BDO, on its ability to "continue as a going concern", according to the Daily Mail newspaper here.

A scathing report published by the newspaper today revealed the group had broken the terms of certain bank loans, that may lead to trouble in accessing funds to run its normal operations. The report said the company owed £257 million due for payment within a year and its banking facilities are being negotiated country by country where it has business interests.

Caparo's business interests span Britain, Europe, the US, India and West Asia. Repeated attempts to reach the group's office in London and Lord Paul's personal phone were futile. Not could comment be secured from the company's auditors.

"Cash flow forecasts to the end of December 2010 indicated the group would be able to trade within its existing 'and expected' loan facilities, Caparo said, though it admitted there was little room for manoeuvre," the Daily Mail reported.

Admits breachesThe newspaper further said that in its latest report and accounts, Lord Paul admits some of the group's companies had breached the terms of their bank loans, blaming the severe decline in trading conditions. Caparo reported a turnover of £861 million but a pre-tax loss of £3 million. Being an unlisted group, the veracity of this report cannot be confirmed at this stage.

In December 2009, in an interview to Business Standard, the group's CEO and Lord Paul's youngest son, Angad Paul, had said the group expected demand for steel products to rebound, with 2010 revenues to be £850-900 million (Rs 6,400 crore). Revenues for 2011 have been projected to be around £1.2 billion (Rs 9,000 crore), to mostly come from the investments completed over the past two to three years.

At the time of the interview, the group's CEO was very bullish about the operations in India and said a third of the group's revenue, or around £400 million by 2011, would come from India.

Questions hanging over the group's ability to access funds for normal operations raises serious doubts over these projected numbers.

On the group's ambitions in India, Angad Paul had said, "(The plan is) that we get the best customers, the best customer satisfaction, best quality and best delivery performances. It's actually that simple. There is nothing world-dominating about it."

Caparo has presence in 50 locations across the UK, North America, India, Spain and Dubai. It employs over 6,000 people worldwide, more than half in the UK. The group established its presence in India in 1994, though a joint venture with Maruti Udyog (now Maruti Suzuki) and has a presence in 16 locations in India, with primary interests in manufacturing automobile components. It is also a major supplier for Tata Motors' iconic small car, the Nano.

The group's chairman, Lord Paul, vocal supporter of the former Labour government in the UK, came under severe criticism last year over expense-reimbursement claims as a peer. He is one of the biggest donors for the Labour party and close to former Prime Minister Gordon Brown.

UK’s new Conservative-Lib Dem coalition government today delivered on a pre-election promise to put a cap on the immigration of workforce from non-European countries. Home Secretary Theresa May today announced an annual cap on immigration from non-UK countries into the UK that will be limited to 24,100 or five per cent less than last year.

An annual cap on immigration was a key plank to the Tory party’s run-up to the election in May this year.

The number of workers entering the UK from outside Europe would be controlled by this new limit, Theresa May announced today. Net migration will be scaled back to the levels of the 1990s - to tens of thousands rather than hundreds of thousands. Introducing a limit on migrants from outside Europe coming here to work was just one of the ways the government intended to achieve this, a Home office release said.

This is only a temporary policy. Permanent limits on non-EU economic migration routes will then be decided and put in place by April 1, 2011.

Details of how the final limit is to be delivered will be agreed upon following a 12-week consultation with businesses. In the meantime an interim limit will be introduced to ensure there is no rush of applications and the number of work visas issued stays below the 2009 levels.

The results of the consultation on the permanent limit will pave the way for fundamental changes to the way in which workers from outside the EU will be chosen to come and work in the UK. The home secretary has also asked the Migration Advisory Committee, the government’s independent adviser on migration issues, to launch a separate consultation into what level the limit should be set at, taking into account social and economic impacts.

May said, “This Government believes that Britain can benefit from migration but not uncontrolled migration. I recognise the importance of attracting the brightest and the best to ensure strong economic growth, but unlimited migration places unacceptable pressure on public services. While we consult on our tough new limit it’s important we have an interim measure to avoid a rush of applications for migrants and ensure that the number of work visas issued stays below 2009 levels.”

The fresh move by UK’s new government was met with guarded concern by the Indian government and strong opposition by the Indian industry. India’s Commerce and Industry Minister Anand Sharma, who was attending a CII-LSE conference in London today said he would take up India’s concerns about immigration cap with his counterparts in the UK. He is to meet UK’s foreign secretary William Hague, Business Secretary Vince Cable and Prime Minister David Cameron as well.

Earlier at the conference on the subject of protectionism, Sharma warned that G-20 countries must not raise any fresh barriers for emerging economies. He said a country like UK had India as the second largest investor after US and there are over 500 Indian companies that have offices in the UK. He further pointed out that India (business with Indian origin) is the second largest employer in the UK after the UK government itself.

Confederation of Indian Industry’s director general Chandrajit Banerjee said if the UK government wanted to forge new and fresh alliance with India, such immigration caps must not exist.

John Cridland, deputy director-general, CBI, UK’s industry body said: “Introducing a cap for work permits is a valid way of balancing the need for skilled workers with the social pressures caused by immigration. But it’s important that we get the structure right. It should be designed so that very highly-skilled people who are essential to work being done in Britain can get a permit more readily. As well as setting the cap at the right level, the Government should also be able to adjust it in future to meet changing economic circumstances.”